Interim city manager tells board members he plans discussion about need for parking rates to rise
This week, the 2024 hurricane season necessitated a vote by the Sarasota City Commission to approve a $400,000 loan from the city’s General Fund to cover the debt service on the bonds the city issued to pay for the St. Armands parking garage.
Interim City Manager Dave Bullock told the commissioners on Sept. 2 that he plans to bring them — at some point — a plan for generating sufficient parking revenue on St. Armands to cover the bond payments, for their consideration.
In an Aug. 15 memo to the commissioners, sent through Bullock, Kelly Strickland, director of financial administration for the city, wrote, “The St. Armands Paid Parking Fund could not collect parking fees from October 1, 2024 through January 2, 2025. Revenues for the year are projected to be less than [expenditures] and transfers for debt service payments.”
On May 16, 2016, the city commissioners seated at that time voted 3-2 to approve the issuance of $17.5 million in bonds to cover the initial expense of the parking garage on North Adams Lane, plus the burying of overhead electrical transmission lines from the Coon Key Bridge to North Washington Drive; signage in the general vicinity of the paid parking area; and the installation of median hard curb end caps.
The expense of the garage was put at $14,060,865.
The bonds were to be issued in October 2017.
Then-Commissioners Susan Chapman and Shelli Freeland Eddie cast the “No” votes. Freeland Eddie expresses skepticism that the metered parking on St. Armands would generate enough revenue to cover the bond debt, while Chapman said she felt that what averaged out to $58,000 per parking space “is very high.”
The parking garage opened on Feb. 12, 2019. It ended up with 484 spaces, with 23 surface lot spots next to it, city staff noted.
In early July 2020, when the commissioners first were asked to approve a $140,000 General Fund loan to the St. Armands Parking Fund, Freeland Eddie renewed her concerns from the 2016 discussion.
That time, in a June 17, 2020 memo, Strickland explained that the infusion of money from the General Fund was necessary because of “the decline of revenues in the St. Armands Paid Parking Area during the COVID-19 pandemic.”
City staff reported in 2016 that the revenue generated by a paid parking program on St. Armands was expected to bring in $20,979,000 for the 20-year life of the bonds for the garage. The facility was planned with 521 spaces, staff also noted.
Budget details that Strickland provided the commissioners in backup materials for their regular meeting on Sept. 2 showed that city staff had expected the parking meter and parking lot revenue on St. Armands to add up to $1,530,000 for the 2024-25 fiscal year, which will end on Sept. 30. Another $464,000 was anticipated to be generated by users of the parking garage.
However, the chart noted, the latest projection for the parking meter and parking lot revenue is $884,125, while the garage revenue is anticipated to add up to $142,284. Thus, the $400,000 loan was needed to help cover the debt service on the bonds.
The General Fund’s largest source of revenue are the annual property tax payments. The city does receive General Fund revenue from other sources, as well. The General Fund pays for expenses of departments that either do not generate any money or that do not produce enough money to cover their operating costs.
An ’advance’
The inter-fund loan transfer was listed as an item on the board’s Consent Agenda 2 for the Sept. 2 meeting, but Commissioner Kathy Kelley Ohlrich pulled it, so she could ask questions of Strickland.
First, Ohlrich noted the use of the phrase “to advance funds” in the Agenda Request Form for the inter-fund transfer. “To me,” she said, that phrase “means that somewhere, sometime, the parking area fund will pay back the money that we’re advancing …”
“That is the hope,” Strickland responded. When the bond resolution was prepared for the St. Armands parking garage, Strickland continued, staff made certain to include language in it that called for any transfer of funds to cover a deficit to be in the form of a loan.
“If this trend continues,” Ohlrich said, and the parking fees on St. Armands are not able to cover the debt, “How would they pay back what we’re advancing them?”
Interim City Manager Bullock told her, “ ‘They’ is we, so the whole premise here” was that the parking revenue would cover the debt service on the bonds and the operating costs of the parking garage.
Yet, he pointed out, the rates are not adequate to do that.
Then Bullock told the commissioners, “We’ll be bringing you back a plan to look at those rates,” with an increase in them to be proposed. “Until that point,” he added, “we’re obligated to pay the debt with something called a … covenant to budget and appropriate legally available non-ad valorem revenue.’ That rolls right off the tongue,” he said, prompting laughter among the commissioners.
In other words, he continued, if the parking assessments cannot cover the debt service, the city has to find legally available money to use for that purpose.
“The parking rates should reach the point where they cover the debt and operating [expenses] and begin to pay the loan back. That’s the long-term plan,” Bullock said.
Nonetheless, he stressed, it will be up to the commissioners to make a decision on raising the rates or deciding “you want to, forever, supplement these enterprise funds with General Fund revenue.”
Department-generated revenue is referred to as enterprise funds in local government budgeting.
The comprehensive parking rate discussion he is planning, Bullock continued, will include “anticipation of how long it will take for the rates to do what they need to do and what that would look like to a customer.”
“If the commission decides to never raise the rates to the level [needed],” Bullock added, “then, theoretically, the loan would sit on the books forever,” or until the garage debt was paid off.
Mayor Liz Alpert told her colleagues, “We have to remember that partially the problem was that we had the hurricanes. There was no parking out there [on St. Armands for months], so no one was paying for parking, so that also hurt.”
Ohlrich ended up making the motion to approve the loan, and Commissioner Kyle Battie seconded it. The motion passed 5-0.